Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.
Steve Geary is adjunct faculty at the University of Tennessee's Haaslam College of Business and is a lecturer at The Gordon Institute at Tufts University. He is the President of the Supply Chain Visions family of companies, consultancies that work across the government sector. Steve is a contributing editor at DC Velocity, and editor-at-large for CSCMP's Supply Chain Quarterly.
To get an idea of the complexity of Alan Estevez's job, you only have to look at the length of his title. Estevez is the principal deputy assistant secretary of defense (logistics & materiel readiness) in the office of the secretary of defense and has served as the acting assistant secretary of defense (logistics & materiel readiness) since April 2009. What that means is that Estevez is the most senior official in the Department of Defense (DOD) devoted to supply chain, distribution, transportation, product support, and logistics issues.
While that may tell you something about what Estevez does, it doesn't begin to convey the scale of the operation he oversees. But the following comparison might provide some perspective: If DOD logistics were a private-sector business, Estevez would be the CEO of a company with close to $200 billion in annual revenue. That would place it in the top 10 of the Fortune 500.
Estevez is a civil servant who has spent his entire career in military logistics, beginning in 1981 at the Bayonne Military Ocean Terminal. He received a Bachelor of Arts degree in political science from Rutgers University in 1979 and a master's degree in national security resource strategy from the Industrial College of the Armed Forces in 1995.
Estevez spoke recently with DC VELOCITY Group Editorial Director Mitch Mac Donald and Editor-at-Large Steve Geary about the challenges the Department of Defense currently faces.
Q: Can you help our readers understand the scale of DOD logistics?
A: Last year, fiscal year 2009, we probably spent about $190 billion in logistics support for the Department of Defense. That included moving equipment, people, and supplies—everything from a bottle of water to a repair part for an Apache helicopter or an MRAP [mine-resistant ambush-protected vehicle] or the MRAP itself.
Q: Is there a large government logistics support infrastructure? A: We operate 19 [government] maintenance facilities throughout the United States, where we fix equipment when it comes back from the fight. The logistics support infrastructure also encompasses 25 Defense Logistics Agency supply depots around the world, including one in Kuwait that is completely focused on sustainment for Iraq and Afghanistan.
Q: What else is included in that $190 billion? A: That number includes the money we spend with our partners in the commercial sector who also fix that equipment, and it includes repair parts. We manage over 5 million line items—part numbers or different SKUs, in commercial parlance—and of course millions and millions of parts underneath those stock numbers. We are also buying everything from gloves and uniforms to food and petroleum. A good chunk of those dollars are spent in direct support of Afghanistan and Iraq.
Q: How big a role do commercial carriers play in the DOD supply chain? A: About 50 percent of what we move in the air goes on the tail of a plane that says "U.S. Air Force" on the back, a C-17 or a C-5, and about 50 percent goes on commercial aircraft. We try to find the right airplane for the right mission at the right time. All of the carriers will have a commitment to provide us with those planes in a time of need.
Q: Is it the same for sealift? A: With sealift, probably 80 to 85 percent of what we move goes commercial. All sustainment cargo goes commercial, so it is going into a 20-foot or 40-foot container. It may be coming from the United States or it could be coming out of stocks in Germany, Japan, or Korea.
We have a great relationship with the American sealift and American-flag carriers. The U.S. Transportation Command does a great job of building relationships with those carriers, and I spend a lot of time doing that myself. We also have capability to access capacity on those vessels in times of need. We have to have a great relationship with the industry to get that capability provided.
We also are using roll-on roll-off carriers to move military equipment.
Q: Is there a military sealift capability? A: We have an internal organic [government-owned] sealift capacity of our own, the Military Sealift Command, which we maintain in a state of readiness. That means in a time of emergency, for example, on day one, I could load out a brigade combat team from Fort Hood through the Port of Beaumont [Texas].
Q: Who actually operates the DOD supply chain? A: Our multiple commands and military services are executing. The U.S. Transportation Command and the Defense Logistics Agency are the primary two joint executors. Then each combatant commander manages logistics underneath it, and then the military services actually execute the logistic structure for their forces, so it is a massive, massive process.
Q: How does the drawdown in Iraq compare with its counterpart in the first Gulf War? A: If you do it as a comparison with Desert Storm, there was more stuff to bring home from Desert Storm. We had 550,000 troops on the ground in March 1991, when Desert Storm ended. We do not have that size of force on the ground in Iraq today—our maximum during the surge was 160,000.
Q: But we've heard that the drawdown in Iraq, combined with the surge in Afghanistan, makes for the largest military movement since World War II? A: Dr. Ash Carter, the undersecretary for acquisitions, logistics, and technology, remarked in a recent speech that Desert Storm was like checking into a hotel room and checking out. Iraq is like living in a house for seven or eight years and then leaving. We have built up a great deal of infrastructure there, including 350 forward operating bases of varying sizes that we were running [at the peak of the surge]—the largest of which are the size of cities.
Q: How is the drawdown in Iraq going? A: Obviously, Iraq is still constituting its government following the recent elections, so we have what we call a waterfall, a gradual drawdown and then a steeper drawdown until the August time frame. By our metrics, we are ahead of our schedule. We have gotten more equipment, more people, and more containers out of the country than our metrics said we had to get out in order to meet the August time frame. So overall, given all the complexities, we are doing extremely well in pulling out of Iraq.
Q: At the same time that you're overseeing the drawdown in Iraq, you're building up in Afghanistan. How does Afghanistan compare with Iraq? A: It is an incredible challenge. Iraq has roads, paved roads. It has electricity. Afghanistan has been completely war torn for 40 years, and it shows. When the wars in Afghanistan started in 1973, Afghanistan was a Third World nation at the lowest end of the Third World nations. Infrastructure in Afghanistan is almost non-existent.
Q: What do you mean by non-existent? A: Well, let's talk about roads. There are just a few major arteries around the country. The rest are dirt roads, if you want to call them roads. They are more like yak paths.
Q: So how does that compare with what you've seen in Iraq? A: I flew in a helicopter for about an hour and a half from one base in Afghanistan to another. During that time, I probably saw five cars moving down one of the main roads, and I saw no cars out in front of farmhouses and houses along that route. Now if you go to the Al Anbar province in Iraq, you're going to see plenty of vehicles.
Q: OK, we understand that logistics are challenging in Afghanistan, but we understand that getting there is a significant challenge as well. A: When moving to Afghanistan, you are either moving through what used to be the Soviet Union to the north, or the routes through Pakistan. Of course, Pakistan has its own troubles, so those routes are at risk even before you cross into Afghanistan. To the west is Iran, and that isn't an option, for obvious reasons.
Q: Is there anything that didn't come up in the conversation that you'd like to share with our readers? A: We need to talk about contractors on the battlefield. We talked about the supply, the industrial base that sustains our forces, but to support those large bases in the field, we do have a large contractor workforce deployed. A good portion of those people engage in what we would call logistics support in sustaining the base or in repairing equipment that's on the battlefield, or they might be managing some of our supplies for us out there in the battlefield.
That is one of the new realities—we used contractors back in the Revolutionary War, but it is more prevalent today. We could not do this without the great support we have from the contractor community, our partners, and transportation providers through some third-party logistics service providers.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”